Article

Back to the future

"Keep it simple" is the mantra of electronic payments veteran Del Tonguette. He says marketing is more important than any high-tech bells and whistles when it comes to ATMs. by Kevin Gibson, contributing writer

February 21, 2002

To summarize his business philosophy, electronic payments consultant Del Tonguette borrows a quote from noted business writer Peter Drucker, who said that "marketing is not a function of a business, it is the whole business."

"The problem is that today we don't have enough good marketeers," Tonguette added.

After some 30 years in the ATM business, he would know. He sees today's climate as one of organized chaos and misdirection. Tonguette watches ATM vendors compete for the latest technology and pile up every link to every ATM network it can, and he wonders where the industry took a wrong turn.

Less is more

"I'm a big believer in simplicity," said Tonguette, who lives in New Albany, Ohio. "The ATM was not designed to replace the bank, the post office AND Ticketmaster, which is what a lot of these vendors are trying to do now."

Stamp dispensing. Ticket vending. Full-color, full-motion advertising. What's next? An espresso machine in every ATM?

"Even though there is a reaction to these enhancements, in the long run simplicity will win out," Tonguette opined.

He also believes there are far too many brands. From Plus to Jeanie, consumers have to check their cards to make sure the ATM they're about to use is networked to their system -- or vice versa.

"If you go to most ATMs there will be six, seven, eight, maybe nine different brands," Tonguette said. "That is extremely confusing to the customer. There is a ballooning in brand names that lacks any strategic rationale whatsoever."

He added, "Brand consolidation could dramatically reduce the cost of goods or services and can triple the bottom line. The consumer would accept it, transactions would increase and costs would decrease."

In the beginning

Tonguette, who began his banking career at Columbus, Ohio's City National Bank (Now Banc One) in 1969, remembers the good old days when an ATM was merely a cash dispenser.

He recalls when Docutel, the first ATM manufacturer, began its rise out of Dallas in the late '60s. He got some early lessons in marketing by watching that company.

"There wasn't a bank that didn't have Docutel machines," Tonguette said. "Their salesmen got rich. They didn't sell, they just took orders."

Why? Part of the reason was that the company was owned by a businessman named Jack Meredith, who was the brother of Dallas Cowboys' quarterback "Dandy" Don Meredith.

"If you bought a couple of Docutel machines, you'd get to go see the Cowboys play, then go to a party" with some of the players, Tonguette said.

But it wasn't all football and easy money in the early days. For instance, the early PINs were six-digit numbers. It was a nightmare, according to Tonguette, and there was no option to select your own PIN. People constantly forgot their computer generated numbers.

A psychological study was later conducted that showed it is significantly more difficult to memorize six digits than it is to memorize four. With four-digit numbers, it is easy to remember them in twos, like "forty-four, sixty-eight." With six, you have to say "one- thirty-eight, four-seventy-seven." See the difference?

Another thorn in the sides of banks in those days were money packets. Back then, ATMs dispensed envelopes with $25 stuffed into them.

"It was extremely labor intensive," Tonguette said. "People had to load all these envelopes by hand. The envelopes would get stuck, and that led to what we called 'jackpotting,' which is when three or four envelopes would be dispensed instead of one."

Tonguette said more often than not, customers would return the money, but even then it created problems. He attributes a lot of these problems to, well, a lack of marketing savvy.

"So often you have the technical people running the business," he said."Any successful business could be a technical-based business, but it should be run by marketeers."

Sometimes even the marketeers don't get it exactly right. Flashback to Cleveland sometime in the early '70s and a big promotion announcing a new ATM program for the city's biggest bank. The bank took out full- page ads, including information for potential bankers on the new line of ATMs.

There was only one problem: The wrong phone number was listed in the ads. The number was for a local dentist, whose office was inundated with queries from eager bankers. It was a typhoon of telephone calls.

"Ohio Bell had to send out its mobile switchboard to handle all those calls," Tonguette recalled.

"Any successful business could be a technical-based business, but it should be run by marketeers." EFT consultant Del Tonguette

In Toledo sometime later, Tonguette was involved in announcing a new ATM program that included a public demonstration -- even the mayor and all the other town bigwigs were scheduled to be on hand. The demonstration was to be held in a downstairs conference room but, as Tonguette and a couple of others were carrying the machine downstairs just a few hours before the demo, they lost their grip.

"The damn thing fell down into the basement and it shattered into a thousand pieces," he said. "We literally had just a pile of parts as all these people were coming in."

What did they do? "We showed them a slide presentation and laughed at our mishap," he said.

It was not long afterward that the marketeers put their marks on ATMs. It was in the mid-'70s that First National Bank in Atlanta decided its customers didn't like dealing with a cold, lifeless machine. The answer: Tillie the Teller. The machines literally had a face with a big smile. They were painted red, Tonguette said, because "they thought that was a nice warm color."

Pretty soon, every bank started to name its machines. The aforementioned Jeanie network? It was a response to Tillie, and those machines, too, used to have a face painted on them.

"If you look at the machines, they are still red," Tonguette said.

Now ATM systems are international, interactive and everywhere you look. Yet Tonguette believes that, even with all the advancements, people still like their ATMs simple. Football tickets? You can get those from the Internet -- or from Don Meredith's brother.